Starbucks Media Bars

In October, Hear Music, an alternative record retailer that Starbucks bought five years ago for $8 million, launched a satellite radio station that plays the kind of adult-oriented jazz, blues, and alternative rock that Starbucks has long featured in its stores. The company is also installing kiosks, called Media Bars, in its shops that let customers listen to digital music, create their own compilations, and purchase them while waiting for their grande double latte.

The next step: Starbucks is investing in new retail outlets that will be music stores first and coffeehouses second. The first two Hear Music Coffee Houses are already operating in Santa Monica and Berkeley, Calif. "This is not a gimmick, and this is not an approach to take to sell more coffee," says Kenneth T. Lombard, president of Starbucks Entertainment, the unit overseeing the music efforts. "This is a firm commitment to take advantage of our unique platform to discover and acquire music."

An interesting move given that in-store music sales are dying because of file sharing. But I think it could be a good one. Starbucks is more about the atmosphere than the product, and I think that will hold true for the new stores as well.